Commercial success

One of the successes of 2005 was the New Star property unit trust. This is a highly suitable investment for trustees and those investors wanting an above-average secure income as well as the prospect of some capital appreciation. It is also ideal for elderly investors who want a comparatively high and rising income.

The fund delivered 62 per cent in the five years to December 1, 2005. It now stands at over 700m and has a portfolio of over 35 properties let to nearly 70 high-quality tenants.

The outlook for commercial property is not quite as good as it has been over the past two or three years but fund manager Roger Dossett still feels he is likely to get a return of over 10 per cent a year while income is predicted to rise from the current level of 4.4 per cent a year.

Dossett believes in spreading the portfolio between all the commercial property sectors. However, he currently favours offices, which amount to around 60 per cent of the portfolio. He also likes industrial and warehouse property, which make up around 24 per cent of the portfolio, but is rather cautious about the retail sector – quite rightly, in my view.

He prefers to invest in property which is pre-let to blue-chip tenants.

Despite the publicity given to increases in residential property prices – around 206 per cent over the past 10 years – commercial property has risen by marginally more.

However, three-quarters of gains in the commercial property sector come from income whereas three-quarters of gains in the residential sector come from capital appreciation.

Around 15 per cent of the New Star fund is invested in property shares managed by Stephen Whittaker, who is one of the top equity investment managers.

This fund has done extremely well and should be part of all income and conservative portfolios.

The rift between the Professional Mortgage Packagers Alliance and rebel packagers is set to widen after the splinter group said it wants to sign up more members. The embryonic Alliance of Mortgage Packagers and Distributors has issued an open invitation to the 10 remaining PMPA members after splitting from the body due to what it […]

Click link to view full video Portfolio manager Aziz Hamzaogullari talks about the unique style he brings to growth investing, shares examples of companies that meet his growth criteria and explains the importance of fundamental research in a concentrated fund.

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